Pollution - Pollution-Haven Hypothesis Another...

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Pollution-Haven Hypothesis Another environmental objection to trade claims that since environmental standards are less strict in developing countries, these LDC's will become pollution havens: places where firms can move and operate without the strict environmental controls of the developed countries. testing the hypothesis: look at environmental regulations compare emissions of firms before and after they have moved look at how "dirty" industries have grown or declined in different countries External Costs Economic efficiency occurs at the level of output at which the marginal social benefits (MSB) equal the marginal social costs (MSC). Demand and supply determine equilibrium prices and quantities in a free market. A free market will result in efficiency when (1) the demand curve is the same as the MSB curve and (2) the supply curve is the same as the MSC curve. Economists make a distinction between private costs and external costs. Private costs are borne by someone involved in the transaction that created the externality. External costs are borne by
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Pollution - Pollution-Haven Hypothesis Another...

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